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The Advantages Of Holding A Note On Your Real Estate


Banks are being more strict than ever with whom they lend money to, so if you are a home seller you really need to consider becoming the bank, and loaning our your own equity to a prospective buyer. Why should I do that, you say?

Let us just say, for this example, you have sold a property that you have fifty thousands dollars in equity in. Deciding to just sell it and pocket the big chunk of money may end up hurting you by increasing your tax liability. It is not only a matter of income taxes or municipal taxes that may affect your bottom line, and there are additional taxes that tax you at a higher rate. There are many rules that govern taxes like capital gains tax, so consulting with an accountant or other tax professional is really important in order to save your money and profits.

Taxes, overall limit the amount of motivation many potential business people have, so it makes you wonder why the government institutes such burdensome policies and regulations. Banks make money by loaning money, and you can do that same thing by taking back a note on the property you are selling, increasing potential buyers by doing that. Whatever you do, make sure you are the primary lien on the property or else you will be assuming a higher degree of risk, and may be left out in the cold if the homeowner cannot pay for the home.

Another good reason to loan your own equity back to the buyer is so that you have a certain amount of control over the property. Most homeowners who are hopelessly behind will give you back the home long before they want or force a foreclosure or a short sale, due to the amount of stress they are usually under. Many homeowners who are in trouble are perfectly content with renting back from you so it is not typically a problem for you to take the home back. Either way you go with the renter, you have more control over how the situation ends up than a bureaucratic bank that will not bend over to help homeowners at all. Selling the property in the same fashion is not a hard task as their are many people with bad credit who want to buy a home.

Loaning your money out again will do a lot of positive things, including helping your next buyer improve their credit history, and bring you a nice chunk of change as you go along. The homeowner may even eventually refinance you out of your lien position altogether.

The author enjoys writing articles about real estate broker in boise idaho & homes in boise idaho. Click on the above links to learn more about these topics! Click here to get your own unique version of this article with free reprint rights.